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DOJ launches antitrust probe over auto emissions agreement with California



The Department of Justice has initiated an antitrust investigation of four automakers who defied the Trump administration by entering into a deal with California on vehicle emission standards.

The Wall Street Journal, citing people familiar with the situation, said DOJ attorneys are looking into whether Ford Motor, Honda Motor, BMW and Volkswagen "violated federal competition law by agreeing with each other to follow emission emission standards beyond those proposed by the Trump administration. "

Honda, BMW and Ford all confirmed that they have been contacted regarding the inquiry.

"Honda will cooperate with the Department of Justice with regard to the recent emissions agreement reached between the state of California and various automakers, including Honda," the automaker said in an email statement.

Ford and BMW both said they received a letter from the DOJ and will cooperate with investigators. Volkswagen declined to comment on the probe, saying it is in regular contact with US authorities.

Evening traffic leaves Los Angeles on freeway 405.

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DOJ declined to comment.

The agreement between car manufacturers and California, the country's largest car market, was announced in July. The deal loosens emissions standards for new cars set by former President Barack Obama, but is stricter than Trump wants.

White House economic adviser Larry Kudlow on Friday reaffirmed the Trump administration's push for a national standard that relaxes the fuel-economy standards mandated by the Obama administration through 2025, saying they will be "released soon."

"The judgment, the previous administration's rule implementation here was excessive, was erroneous and was not based on proper cost-benefit analysis," he said on CNBC's "Squawk on the Street." "Now we have our discussions with the state of California. . We want a standard for the whole country. "

Kudlow, who did not mention the DOJ investigation, reiterated the Trump administration's argument that federal statutes, including fuel economy regulations, violate state statutes.

No major automaker has supported a complete reversal of Obama's standards, though many have supported re-evaluating the rules to address current market conditions, lower gas prices, electric vehicles and increased sales of trucks and SUVs. Many car manufacturers have supported a national standard.

Automakers have been concerned that the controversy between the Trump administration and California could turn into a drawn-out legal battle, creating uncertainty for an industry that plans its products years in advance.

But complying with California's rules is good business for automakers. The state accounts for about 12% of US vehicle sales. Failure to sell there and other states that comply with California rules will be detrimental to the business.

CNBC's Meghan Reeder, Phil LeBeau and Ylan Mui contributed to this report.


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